VISION 2021 - Galleria

A man walks past a storefront in the Johnstown Galleria full of signs advertising store-closing discounts.

About 10 mannequins, many without heads, stand in a darkened storefront on the second floor of the Johnstown Galleria.

There are 27 empty storefronts and 38 occupied spaces in The Galleria, an unofficial count conducted by The Tribune-Democrat shows.

The Galleria was scheduled to be included in the Cambria County sheriff’s sale in December, but the sale was postponed at the request of the plaintiff, U.S. Bank National Association, until March 12.

Banks had foreclosed on the Galleria at the beginning of 2020, taking it as collateral for debt owed by the Galleria’s owner, Adar Johnstown LLC.

New York-based Spinoso Real Estate Group was appointed by courts last February to manage the mall for lenders that repossessed it. Spinoso’s role has been to prepare the mall for sale to a new owner.

In November, as a business announced its decision to leave the food court, Spinoso hinted at big changes in 2021 and persuaded owners of Red’s Texas BBQ to stay.

No further information has been shared by Spinoso.

Among the occupied spaces in the Galleria, there are five offices, including a military recruitment center and a Boy Scouts office; seven clothing businesses, including shoes, apparel and accessories; nine businesses that sell merchandise, including novelties, collectibles, wellness items, books and jewelry; six storefronts comprising cellphone retailers and related services; four are personal-care services, including hair, nail and massage salons; two offering tax and insurance services; and five are restaurants and entertainment. 

Former Galleria management company Zamias Services Inc. still holds an office in the mall. 

‘Difficult to redevelop’

Zamias Services President Perry Russ was director of mall leasing in 1992, when company founder George Zamias built the Galleria in Johnstown. 

Redeveloping the mall would be much easier, he said, if one entity owned the entire parcel. However, that’s not the case. While lenders foreclosed on what Russ calls “the core campus” of the Galleria, there are other complex layers of ownership that encumber new development. 

“Everyone thinks the mall can turn into a hospital or something,” Russ said. “But when you don’t own all the components, it’s difficult to redevelop.”

The empty Bon-Ton store and lot is owned by Lionheart Capital, a global real estate investment and development firm. The vacant Sears section of the mall is owned by Sears.

There are two anchor stores that remain. Boscov’s owns its store. And J.C. Penney is the only anchor store that rents space, Russ said. 

“There are development rights that prohibit expansion of existing buildings,” he said. “For building expansion to take place, you’d have to go to all owners and reach an agreement to change that.”

Layers of ownership

And beyond that, a major plan for redevelopment could require consent from more property owners. There’s a master agreement that includes other property on Galleria Drive – including the former Toys “R” Us site, he said. 

To show the varying layers of ownership around the Galleria, Russ said Walmart used to be where Planet Fitness is currently on Galleria Drive – and still today, there’s a stipulation set by Walmart limiting the uses for that location, Russ said.  

“If one entity owned everything, the Galleria would be a lot easier to redevelop,” he said. 

A project that stays within the existing footprint would be easier to accomplish, he said.

If the Galleria’s core campus is sold for a low price at a sheriff’s sale, the new owners can offer bargains when it comes to leasing space, Penn State professor Fred Hurvitz said.

Hurvitz is Kohl’s Professor of Practice for Retail Studies at Penn State. He focuses his research on retail, but he also has firsthand knowledge of the Johnstown Galleria when it opened in 1992. At the time, he and his friend had a vending business.

“One of our first clients was the mall with the Zamias brothers building and owning it,” he said. “I was amazed how busy and active it was in the 1990s.”

‘Redoing themselves’

Today, it’s much different, not just for the Galleria, but also for other malls across the country. A quarter of existing malls are projected to close in the next five years.

“The outlook for malls is really tough, and what happens to them depends,” Hurvitz said. “Some of the higher-end malls will be fine, but they are redoing themselves – adding yoga studios or urgent-care centers – but it’s still tied together with good retail.”

He pointed to what’s happening in State College. A mini-casino was announced in January for the Nittany Mall, which has really been suffering, he said. 

Hurvitz declined to speculate on what could become of the Galleria or what might help it survive – except to say recruitment of an anchor store would certainly be a positive step. 

The vast majority of malls are hurting, he said, but in the glory days of the American mall, Johnstown was home to two tycoons in the industry. Zamias Services owned about 30 malls. Crown American, founded by Frank Pasquerilla, owned about the same number. 

Pasquerilla’s son, Mark Pasquerilla, reflected on the glory days of malls.

“Everything seemed to work,” he said in an email.

By the end of the 1980s, the industry was suffering from “irrational exuberance,” he said.

“Developers were looking at putting malls on top of successful malls,” Pasquerilla said. “We fought over small markets like Pikeville, Kentucky; Lumberton, North Carolina; and Rock Hill in South Carolina.”

‘Shareholder value’

The ’90s brought a game of the real estate investment trusts and asset management, Pasquerilla said.

In 1993, Pasquerilla took his malls public as Crown American Realty Trust.

“You made money for shareholders by making acquisitions that would increase shareholder value,” he said. “Our company had to learn to play the public company game, but so did our entire industry.”

Crown American has sold all of its malls.

“We wanted to create shareholder value,” Pasquerilla said.

Crown American merged with Pennsylvania Real Estate Investment Trust in 2003. Pasquerilla is on the board of PREIT. Zamias Services continues to own or manage a few malls. 

Pasquerilla said in the glory days of malls, the business was intensely competitive. 

“Folks moved from one company to another,” he said. “For example, we once had a VP of leasing, who moved to Zamias in the same role and ultimately became a regional VP of leasing for Simon Properties.”

Pasquerilla said his father and George Zamias created an exciting atmosphere in a small town.  

“Frank Pasquerilla and George Zamias were visionaries at the right time,” he said. “They understood how to make retail projects work in smaller markets. Having two folks in the same industry in a small town created a Silicon Valley atmosphere.”

Russ O'Reilly is a reporter for The Tribune-Democrat. Follow him on Twitter @RussellOReilly.

 

Trending Video

Recommended for you